In our mouths and in our hearts: Day 43
(Introduction.)
Today: Savings and loans
526. “If you lend money to my people, to the poor among you…” (Exodus 22:24) = lend to poor people
527. “…do not act toward them as a creditor.” (Exodus 22:24) = don’t demand payment from someone who can’t pay
528. “You may dun the foreigner.” (Deuteronomy 15:3) = however, it’s ok to demand payment from outsiders
529. “When you make a loan of any sort to your countryman, you mut not enter his house to seize his pledge.” (Deuteronomy 24:10) = a creditor may not collect collateral by force
530. “You must return his pledge to him at sunset, that he may sleep in his cloth.” (Deuteronomy 24:13) = a creditor must return the collateral at times when the debtor needs it
531. “If he is a needy man, you shall not go to sleep in his pledge.” (Deuteronomy 24:12) = a creditor may not hold onto the collateral at times when the debtor needs it
532. “You shall not take a widow’s garment in pawn.” (Deuteronomy 24:17)
533. “A handmill or an upper millstone shall not be taken in pawn, for that would be taking someone’s life in pawn.” (Deuteronomy 24:6) = a creditor may not take implements necessary for sustenance
534. “Do not lend [your fellow] your money at advance interest.” (Leviticus 25:37)
535. “You shall not deduct interest from loans to your fellow, whether in money or food or anything else that can be deducted as interest.” (Deuteronomy 23:20) = don’t borrow at interest
536. “Exact no interest from them.” (Exodus 22:24) = don’t be involved in any way in the charging of interest, as a borrower, lender, witness, guarantor, or contract writer
537. “You may deduct interest from loans to foreigners.” (Deuteronomy 23:21) = both as a borrower and as a lender
538. “In all charges of misappropriation — pertaining to an ox, an ass, a sheep, a garment, or any other loss, where one party alleges ‘This is it’ — the case of both parties shall come before God; the one whom God declares guilty shall pay double to the other.” (Exodus 22:8)
539. The laws of inheritance (Numbers 27:8-11)
540. “You shall appoint judges and officials for your tribes.” (Deuteronomy 16:18)
ah, if only people would take the interest laws as seriously as they take the food laws.
#536 – Huh? Contract Writer or Guarantor?
From whence do you derive this extrapolation?
presumably, because if something is bad, you shouldn’t enable it, and then claim no responsibility. not a bad principle
interesting that the borrower is also held accountable. . . but if a person is taking out a loan with interest, I think it’s safe to assume that they can no interest-free alternatives.
Bycenator- It’s not me, it’s the Rambam. And he gets it from Mishnah Bava Metzia 5:12.
Amit-
What would the economy look like if people actually followed the interest laws, without taking advantage of loopholes? Is it sustainable?
any idea why my comments keep on getting sent to moderation? (I’ve been using this handle for months with no problem)
What would the economy look like if people actually followed the interest laws, without taking advantage of loopholes? Is it sustainable?
depends what you mean by “sustainable”. If Jews didn’t lend money to each other with interest, Israel probably wouldn’t be able to exist at all. On the other hand, there’s no guarantee that the modern capiatlist economy and the modern nation state are sanctioned by the Torah as-is (just as there’s no guarantee, and many would say there’s no possibility, that contemporary sexual ethics are sanctioned by the Torah). So there wouldn’t be any starbucks, but there wouldn’t be any forced evictions for unpaid mortgages, and people would be more into agriculture and small manufacture, there would be no way to accumulate capital (b/c money would stop making so much money on its own). Possibly less poverty, but also less prosperity overall, and a lower quality of life. an interesting exercise. Thanks, BZ.
I wrote a whole long thing about interest and usury and the impact prohibiting them would have on our contemporary economy (and lifestyle, and ethics and many many other things), and then the site ate it.
SO: I’ll just say that compliance to the money-laws does not jibe with who we are now. Just like compliance to sex laws doesn’t exactly jibe with who we are now. So we reread and reimplement.
Amit– there may be a distinction to be made between business loans, and helping-people-through-really-tight-times loans. As for the second, I think having gmach’s that do offer interest free is a really good thing.
So it seems to me that the contemporary equivalent of what the Torah is trying to prohibit is payday loans and pawn shops and generally exploiting people who are down and out. But I’m lending money with interest when I make a deposit in a savings account, and it can’t reasonably be claimed that I’m exploiting JP Morgan Chase. And perhaps this is ok according to the letter of the law because the bank is owned by non-Jews, but that seems like a problematic thing to rely on. And one could claim that this is an “investment” and I’m earning “dividends” (at a fixed annual percentage rate) — this is what credit unions do for reasons unrelated to halacha — but as far as I understand, this (which I think is heter iska, but correct me if I’m wrong) is just a semantic distinction with no substantive difference. If this weren’t a possibility, then people would just save less and feel more pressure to spend their earnings immediately — not a problem if you’re in a subsistence economy, but this would have a negative impact today.
On the other side, anyone who takes out a mortgage on a home is borrowing with interest. Nowadays only a very select few can afford to buy a house up front without a mortgage, so eliminating this possibility would widen the gap between the haves and the have-nots, the opposite of the Torah’s intent. And it seems unlikely that a free-loan society would be in any position to give out six-figure loans. (How is this dealt with in Israel today? Heter iska again?)
1. Yes, this is probably the Torah’s intention. But the Rabbinic reading of it is much more expansive. Housewives are prohibited from lending each other food without computing the monetary value. Trading days of work between farmers is also regulated. You can’t just “give” people interest, even if you’re trying to help them, and unlike most monetary matters you can’t even just “waive” your rights. It became a deeply religious thing, associated with heresy and used an an explanation for impovershment (look it up at the end of bavli bava mesia).
2. The status of a limited liability corporation in all matters halakhic is questionable anyway. (its not a person, so why should you treat it like a person?)
3. But what I was saying is that in a society with no interest lending at all then everything would be different. Society as we know it today, including the Internet, adn the nation state and the limited-liability corporation and most everything else would not exist.
4. Banks in Israel have heterei Isqa, but perhaps they don’t need to because they’re not people (a point made by R. Moshe Feinstein). But a case in point are islamic banks, which have more intricate systems of allowing usury (i.e. bending the law).
The upshot of all this is that the law as it stands just can’t work, and the justification is lost anyway, since in the Bible it means one thing, and in the Mishnah it means something else entirely (the Bavli debates whether the interest money is considered stolen or not — i.e. it might not even be a moral issue for them anymore, just a matter of ritual), so we keep it as is and work around it. We keep it in order to point out the inherent flaws in our Economy and society (whaddya mean you can make money from money??!!??) while maintaining the ability to live within them, because there’s really no other way for us.
the reference to bavli bava mesia should be “bavli bava mesia chapter 5”
rebecca – I didn’t see your remark. Of course there is, and gmachim are a really good idea. But in the purely scholarly realm, it strikes me as odd that the distinctions didn’t get through the thick skulls of hazal. They obviously had the option and they just didn’t want to. its like it hurt them.
But yes, that is what we say *now* – for business (and mortgages), yes. for tight times – better not to. (I recall Rav Danny Wolf telling a story about how two Jews in Borough Park who signed a heter Iska ended up in court when one claimed the other was violating one or another law aimed at protecting lenders, and the other one said it was a religious thing and a violation of his 1st amendment rights).